High fertilizer prices weigh on farmers across the developing world

The global fertilizer market has been experiencing a significant increase in prices, with the situation expected to persist throughout 2022. This surge is posing particular challenges for farmers in Africa, where the impact is felt even more acutely. Adama Suzuki, the sales manager for international markets at Rocosan Limited, shed light on the concerning trend in an interview with CNBC Africa. The root cause of the current crisis lies in logistical disruptions affecting the production and supply chain of natural gas, a crucial raw material for chemical fertilizer manufacturing. The spike in prices is not isolated to Africa, but extends to Europe and other regions as well, with some areas witnessing price hikes of over 300%. This surge in costs is not only making fertilizers prohibitively expensive but also leading to shortages, putting significant pressure on farmers in Africa. The logistical challenges, such as delays in fertilizer shipments, are forcing farmers to either incur higher expenses or make do with less fertilizer, a suboptimal scenario for agricultural productivity in the region. Suzuki highlighted the drastic 300% increase in fertilizer prices, underscoring the severity of the situation. The surge in prices is impacting key fertilizers like DAP, Urea, and NPK, which are commonly used across Africa and beyond. Urea, in particular, is heavily relied upon by African farmers and is primarily sourced from natural gas-producing countries like Russia, Europe, and the Middle East. The disruptions in natural gas supply chain are leading to price escalations across the board. Additionally, the supply chain bottlenecks for chemicals essential in NPK production are further compounding the price pressures. The interconnectedness of these factors means that any price hikes in one component reverberate throughout the entire industry, affecting farmers, producers, and consumers alike. The ripple effects extend beyond fertilizers to impact adjacent industries like animal feed production, ultimately driving up prices for essential commodities like meat. The labor shortages and COVID-related restrictions at ports are exacerbating the situation, resulting in prolonged delays in fertilizer clearance and distribution. Reports of fertilizers languishing in ports for months due to labor and documentation issues highlight the severity of the challenges facing the industry. Amidst this crisis, companies like Rocosan Limited, specializing in organic fertilizers, are leveraging alternative production methods to mitigate the impact of rising natural gas prices. By predominantly using animal-origin inputs like poultry feed, these companies are able to partially insulate themselves from the price volatility associated with fossil fuel-based fertilizers. While some inputs are still linked to the natural gas industry, the overall cost escalation for organic fertilizers remains lower compared to conventional counterparts. This resilience underscores the burgeoning interest in organic farming globally, signaling a shift towards sustainable and eco-friendly agricultural practices. The potential decline in fertilizer demand in sub-Saharan Africa presents both challenges and opportunities for the region. To navigate this crisis, African governments need to explore technological advancements that reduce reliance on NPK fertilizers and promote local fertilizer production. By incentivizing domestic production and attracting foreign investment into fertilizer manufacturing, African countries can bolster their self-sufficiency and buffer against global supply chain disruptions. Countries like Uganda, heavily reliant on fertilizer imports due to the lack of local production facilities, are particularly vulnerable to external shocks. Establishing domestic fertilizer plants would not only enhance food security but also insulate these nations from the vagaries of the global fertilizer market. By fostering a robust and self-reliant fertilizer industry, African countries can navigate the current challenges and build a more resilient agricultural sector for the future.